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Bank Accounting under IFRS

Two-day ONLINE workshop

Next training dates to be confirmed soon!
Price: 480 Euro net

Contact us about organising this course in-house!

Accounting principles related to financial instruments as set out by International Financial Reporting Standards (IFRS) are often listed among the most difficult chapters of the IFRS accounting regulations. This is mainly due to IFRS 9 Financial Instruments, which became mandatory in 2018 and reformed the way in which banks account for their assets and liabilities. Not only did IFRS 9 change the principles of presentation of bank assets in the balance sheet, but it also implemented a new model for estimating credit allowances related to loans, which are now calculated based on a complex expected-losses model.

Undoubtedly, understanding how banks account for their operations and report them in the financial statements is a crucial skill – not only for employees of accounting and financial reporting departments of a bank. This course will also be of interest to other bank staff members, including employees of Internal Audit, Risk Management, Treasury and ALM, as well as the business departments.

Our two-day course is suited to all those who are interested in how financial instruments are accounted for under IFRS, both for those with an accounting background and those with little experience and education in this field.

You might also be interested in the following courses: Introduction to Banking | Hedge Accounting for Banks under IFRS

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The workshop is intended both for managers and staff participating in the process of accounting and financial reporting in banks and for employees of other departments of banks participating in processing or analysing accounting information, including Risk Management, Treasury, ALM and IT.

Tangible Benefits

Participating in the course you will:

  • Learn what financial assets and financial liabilities are, and how they are presented in a bank’s balance sheet and income statement
  • Discover why financial instruments are presented and accounted for using different models, including FVPL, FVOCI and Amortised Cost
  • Find out about key IFRS standards important for bank accounting, including IFRS 9, IAS 32, IFRS 7 and IFRS 13
  • Realise how banks categorise their financial assets under IFRS 9 business model and SPPI criteria and understand the differences between FVPL, FVOCI and Amortised Cost accounting
  • Learn how banks calculate interest income and interest expense using effective interest rate method and understand what fair valuation is all about
  • Understand the key requirements related to measurement of expected credit losses
  • Find out how modifications of contractual arrangements with customers are accounted for and what POCI assets are

Advantages

Interactive methodology: the training course will be conducted in the form of an interactive workshop, where all relevant issues will be discussed with the active participation of participants, and the trainer will answer participants' questions.


Practical approach: the topics discussed during the training course will be presented based on the trainer's practical experience and illustrated with examples from banks’ financial statements. Quantitative examples will be solved using Excel spreadsheets.

Programme

Introduction: a look into a bank’s financial statements

What are the main components of a typical bank’s balance sheet and income statement? What types of banking products and banking operations are they attributable to?

What are financial assets, financial liabilities, and where do they appear in the balance sheet and income statement.

Review of key IFRS standards that provide guidance for accounting for banking products and operations, including:

  • IFRS 9 Financial Instruments
  • IFRS 13 Fair Value
  • IFRS 7 Financial Instruments - Disclosures
  • IAS 32 Financial Instruments - Presentation

Valuation and presentation of financial assets and financial liabilities

  • Book value and market value of the bank's assets and liabilities - why are they different?
  • Classification and measurement of financial assets in accordance with IFRS 9, including debt, equity and derivative instruments.
  • Why are some financial assets and financial liabilities presented at fair value while others are presented at amortised cost?
  • What are the implications of classification to the recognition of gains and losses?
  • Key requirements related to “business model criterion” and “SPPI test” and their consequences to accounting treatment of financial assets.
  • Measurement of financial assets and liabilities at fair values according to IFRS 13 and "fair value hierarchy".
  • Measurement of financial assets and financial liabilities at amortised cost and construction of the “effective interest rate”.
  • “Fair Value Option” application for financial assets and financial liabilities and treatment of own credit risk measurement of financial liabilities.
  • What are the consequences of classifying a financial asset to each of the categories: fair value through profit or loss, fair value through OCI and amortised cost.

Expected credit losses

  • What are expected credit losses, and how are they calculated under the general “three stage” approach?
  • What are the differences and similarities between the IFRS 9 impairment model and the Basel credit risk requirements?
  • When are 12-month and when life-time expected losses required?
  • IFRS 9 minimum requirements related to expected credit losses calculation and possible simplifications and “practical expedients”.
  • How expected credit losses are calculated in practice.
  • Estimation of expected credit losses for off-balance sheet positions and non-financial assets.

Derecognition of financial assets and financial liabilities

  • When can banks remove financial assets and financial liabilities from the balance sheet?
  • Write-offs and their consequences.
  • Accounting treatment of complex refinancing operations, such as sub-participation and securitisation.

Modifications of financial assets and financial liabilities

  • How are modifications of financial assets and financial liabilities, such are renegotiations of loan contracts, accounted for?
  • When is derecognition required and when only adjustment of the gross carrying value is applied?
  • What are the implications of modifications to credit risk measurement and the impact on the profit and loss account?
  • What are “POCI” (purchased or originated credit impaired) assets and how can they be generated?
  • IFRS 9 requirements related to accounting for POCI assets, including credit-adjusted effective interest rate and specific treatment of credit risk allowances.

Introduction to hedge accounting

  • What is hedge accounting and how can it help eliminate “accounting mismatches” in banks, resulting from application of derivatives to management of balance sheet structure.
  • Gains and costs of hedge accounting.
  • Examples of typical economic hedging relationships in banks where hedge accounting could be applied.
  • Why banks can chose between application of hedge accounting in accordance with IAS 39 and IFRS 9 and what are key differences between the two models.

Disclosure requirements related to financial instruments

Review of the requirements of IFRS 7 with regard to financial instruments and financial risks, in particular liquidity risk and credit risk management. Examples of qualitative and quantitative disclosures – good and bad practices from available financial statements.

Date and location

Next training dates to be confirmed soon!

Our training days run from 9:00am to 4:30pm CET | 11:00am – 6:00pm GST | 12:30pm – 7:30pm IST.

This is an ONLINE LIVE course - join us wherever you are in the world!

Price: 480 Euro net

Contact us about organising this course in-house! 

Maciek Kocon

Maciek is an experienced financial risk management consultant and trainer.

He is a Senior Associate Trainer with EY Academy of Business and specialises in delivering courses in the areas of financial management, banking, valuations and accounting for financial instruments.

E-mail the Course Co-ordinator

Contact

Katarzyna Babiarz

tel. +48 502 444 012

katarzyna.babiarz@pl.ey.com

Ask us about our corporate rates and about organising this course in-house - we will be happy to discuss your needs and accommodate this course to your timezone!

Participants of this two-day workshop will receive 14 CPD (Continuous Professional Development) credit hours.

Our courses fulfil the requirements of the professional development schemes of international professional bodies such as ACCA, IIA, PMI®, etc.